The income statement of Vaughn Company is shown below. $6,950,000 VAUGHN COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue Cost of goods sold Beginning inventory $1,890,000 Purchases 4,430,000 Goods available for sale 6,320,000 Ending inventory 1,590,000 Cost of goods sold Gross profit Operating expenses Selling expenses 460,000 Administrative expenses 690,000 Net income 4,730,000 2,220,000 1,150,000 $1,070,000 Additional information: 1. Accounts receivable decreased $390,000 during the year. 2. Prepaid expenses increased $160,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $300,000 during the year. 4. Accrued expenses payable decreased $110,000 during the year. 5. Administrative expenses include depreciation expense of $50,000. Prepare the operating activities section of the statement of cash flows using the direct method. VAUGHN COMPANY Statement of Cash Flows (Partial)